The economy also shed thousands of jobs in July
Canada’s unemployment rate inched slightly upwards in July, rising to 5.5% as wages posted noteworthy growth.
Statistics Canada revealed on Friday that average hourly wages increased by a further 5% last month after rising in May and June, while the economy shed 6,400 jobs in a further sign that the Bank of Canada’s rate-hiking trajectory is having its desired impact.
That jobs figure marked the third month in a row that the labour market has slowed and contrasted sharply with economists’ average expectations of a 25,000-job gain.
Construction, public administration, information, culture and recreation all saw job declines, while health care and social assistance, educational services, finance, insurance, real estate, and agriculture posted growth.
RBC economist Carrie Freestone suggested that the jobs figures could point to a rate hold in the Bank of Canada’s next announcement, scheduled for September, although that’s by no means a nailed-on certainty.
“The jobs report is one of a slew of indicators in advance of the BoC’s next interest rate decision on September 6th and the question remains whether interest rates are sufficiently restrictive to tame inflation,” Freestone said.
“Today’s jobs report is a point in favour of keeping the overnight rate at 5%, but the BoC will closely monitor additional indictors – particularly upcoming inflation and consumer spending reports – to determine whether an additional hike is needed.”
While the central bank hit pause on rate hikes in the spring, economic indicators – including a robust labour market and inflation that proved more resilient than anticipated – impelled two further increases in June and July, with two 25-basis-point increases meaning the Bank’s trendsetting interest rate has now risen by 475 basis points since March last year.
